£11m student flat project put on hold

Published on Thursday 9 April 2009 10:05

AN £11 million development of student flats, shops and restaurants has become the latest major city scheme to be put on ice.

Student accommodation provider Unite had been due to transform the eyesore former council social work headquarters on Leith Walk but it has now put the scheme on hold as it scales back new developments outside London.

The decision is a blow to plans to revive the Leith Walk area, which has been said to have the potential to become Edinburgh's answer to the trendy London suburb of Islington.

It also represents the first sign of the economic downturn having an impact on student developments in the Capital, which had previously been one of the most resilient sectors.

Unite has been working on its plan for the site since buying Shrubhill House from the city council for 6m in 2005. Its value is thought to have plummeted since then.

A spokeswoman for Unite said: "We are considering our options on that site in light of the strategy we announced with our preliminary results to focus all equity on our London pipeline."

Unite, which recently completed its development at nearby McDonald Road, said earlier this month that it was looking to sell "non core" assets.

Unite's scheme would have seen Shrubhill House demolished and replaced by 60 flats providing bedrooms for 260 students.

Two new ground-floor shops and three restaurants or cafs would also have been created.

Instead, the future of the site is unknown. It is thought that any company will find it difficult to fund development on such a site in the current climate.

It is the latest delay to development of the Leith Walk area. Last week, BL Developments announced that it would be submitting amended plans on a site it owns at Shrub Place that would see a hotel created instead of original plans for shops.

Angela Blacklock, Labour councillor for Leith Walk, said that delays to the scheme were a blow to both the regeneration of the area and to the construction sector.

"The development as planned looked pretty good. In some ways, Leith Walk is more suited to student accommodation than any other road so it is a shame.

"This is another blow for construction in Edinburgh as well. White collar workers were affected first (by the downturn] but now we're seeing it affect all other industries and this will affect jobs."